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Performance Audit and Management:
Sharing Lessons Learned
Ray Shostak, CBE
Taller Regional de Auditorías de Desempeño
Intercambio de Experiencias en la Implementación de Auditorías de
Desempeño
Lima, Peru August 2015
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Outline of the Presentation
• Context and The Management of Government
Performance
• The Performance Audit Landscape
• The UK Supreme Audit Institution (SAI) – The
National Audit Office
• Continuing the dialogue……..
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CONTEXT AND THE MANAGEMENT OF
GOVERNMENT PERFORMANCE
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What are governments about……
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….and who makes the biggest difference?
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Who owns Performance,
Audit and Management?
Frontline Providers
Line Ministries
The Ministry of Finance
The Centre
of
Government
The Supreme Audit
Institutions
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Outcomes for and with Citizens
ACCOUNTABILITYACCOUNTABILITY
with
consequences
Ministries
President
Providers
Frontline Staff
BUDGETING FOR
RESULTS
Programme Programme
budgets against
results
Unit costing
Monitoring
Efficiency
Joint procurement
…….
MONITORING,
CAPACITY
STRENGTHENING AND
INTERVENTION
CULTURE
• Outcomes focus
• Data rich
• Can do
• Real time monitoring
• Reform
SKILLS
• Problem solving
• Cost benefit analysis
• Engagement
• Evaluation
ACTION
When off track
Establishing and
Incentivizing PRIORITY
Goals/Ambitions
Government PRIORITIES
Government
Providers
Non
Government
Providers
Frontline StaffFrontline StaffProgrammes, Objectives, Milestones,
Deliverables
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Performance Frameworks….A System
Leadership and Management from the Centre of
Government
1. Strategic
Management
2. Coordinate
policies
3. Monitor and
improve the
performance
4. Manage the
politics
5. Engage and
Communicate
-Set priorities
and BAU
-Align goals and
budget
-Set ambition
-Horizon
scanning
-Whole
government
perspective
-Ensure
consistency
-Ensure
coherence
-Manage cross
government work
-Consultation
-Whole
government
perspective
-Monitor progress
on priorities
-Real time action
oriented reviews
-Intervene to
unlock obstacles
-Lead innovation
and reform
-Whole
government
perspective
-Lead the political
negotiations
-Create
framework
-Manage conflict
-Manage legal
issues
-Whole
government
perspective
-Open government
-Own a coherent
narrative with
discipline
-Ensure evidence
base
-develop and
implement
engagement strategy
-Whole government
perspective
8The Role of the Centre of Government, IDB (2013)
Government Performance Audit Landscape
An Example of UK
• Impact Assessments
• Formative and Summative Monitoring
• Evaluations
Line Ministries
Line Ministries
Supreme Audit
Institution
Supreme Audit
Institution
The Cabinet Office
The Cabinet Office
HMT
Finance Ministry
HMT
Finance Ministry
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• Major Projects
Authority
• What Works
Centres
• PMDU/Impleme
ntation Unit
• Guidance
• Business Cases
• Financial Audit
• Value for Money
Studies
• Insight and
Investigations
Some Observations on Managing for
Performance and Performance Frameworks
• Implicit or explicit in the way government does its
business
• Focuses on outcomes for citizens – not just actions
• Establishes the culture with a clear focus on results
• Enables the government to spend money wisely
• Involvement of all the stakeholders in the delivery system
• Facilitates cross agency working
• Creates a ‘can do’ approach to problem solving and value
for money
• Establishes accountability to taxpayers
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THE PERFORMANCE AUDIT
LANDSCAPE
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Good Governance – ‘When SAI’s are professional and
independent they strengthen the accountability chain’
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Mapping the Role of SAI; OECD; 2014
The Value and Benefits of SAI: Making A
Difference to the Lives of Citizens
SAI should in accordance with
their mandates and applicable
professional standards, conduct
any or all of the following
• Financial Audits
• Performance Audits
• Audits of Compliance
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INTOSAI; ISSAI 12; 2013
Why Performance Audit
Encourage innovation
Don’t spend
more than available
Improve Value for Money
Identify and solve delivery
problems
Greater efficiency
To drive improved
results
Deliver cross ministry
collaboration
Deliver cross ministry
collaboration
Hold public
services to account
To secure Clarity of goals and ambition
Transparency to the public
To Deliver cross
Ministry collaboration
To Understand
impact of policy on practice
Increase citizen
perception
Hold Ministries
to account
Economy, Efficiency and Effectiveness
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Public Sector Auditing
• Enhancing accountability, transparency and encouraging
continuous improvement in the use of public funds, assets and of public administration performance.
• Facilitating the functions of general oversight and corrective action those responsible for the management of publicly funded activities.
• Providing independent, objective and reliable information,
conclusions or opinions based on evidence
• Creating incentives for change by providing new knowledge, comprehensive analysis and well founded recommendations for improvement.
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INTOSAI 100; Fundamental Principles of Public
Sector Auditing; 2013
Enablers
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Better Results at an
Improved Cost
Better Results at an
Improved Cost
Independent Leadership
Independent Leadership
Robust Methodologies
Robust Methodologies
Honest Relationships
Honest Relationships
Reliable DataReliable Data
SkillsSkills
Some Observations on Performance Audit
• All SAI are on a journey
• Focusing on results from expenditure of public money – value for money judgements
• Advantage of independence
• Ensure clear standards and principles
• Establish criteria for good public administration –what ‘good’ looks like
• Develop a true and fair account – from evidence
• Use international benchmarks
• Judge impact
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UK
PE
RFO
RM
AN
CE
AU
DIT
making policy practice
The Journey to the NAO
Budget Responsibility and National Audit Act 2011Budget Responsibility and National Audit Act 2011
National Audit Act 1983National Audit Act 1983
Exchequer and Audit Departments Act 1821Exchequer and Audit Departments Act 1821
Exchequer and Audit Departments Act 1866Exchequer and Audit Departments Act 1866
1861 Committee of Public Accounts1861 Committee of Public Accounts
1780 Commissioners for Auditing the Public Accounts1780 Commissioners for Auditing the Public Accounts
1559 Auditors of the Imprest1559 Auditors of the Imprest
1356 Richard Chesterfield 1356 Richard Chesterfield
1314 Auditor of the Exchequer 1314 Auditor of the Exchequer
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The NAO Role: To Help the Nation Spend Wisely
Scrutinises public spending for Parliament
Help to hold government departments and the bodies
we audit to account for how they use public money
Helps public service managers to improve performance
and service delivery, nationally and locally
INPUTS
822 Staff
£63 Million
OUTPUTS
427 Accounts Certified
60 Reports to Parliament
Improvement and Benchmarking Advice
Detailed Recommendations
OUTCOMES
Accountability to Parliament
Improved Public Services
£1.1 Billion savings
NAO Annual Report 2015
Five Dimensions…..
Financial Audit
Investigations
Value for Money Studies
Support to Parliament
International
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The Audiences for NAO Work
• The Committee of Public Accounts (PAC)
• Other select committees, including the Public
Administration Select Committee, Environment,
Health, Transport, etc.
• All MPs and peers
• Senior officials in government departments
• Members of the public and groups interested in
aspects of our work
making policy practice
* Committee of Public Accounts
The Accountability Process
Roles
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NAONAO
Provides Parliament with C&AG Reports
Provides Parliament with C&AG Reports
C&AG and NAO Staff attend PAC
C&AG and NAO Staff attend PAC
Supports PAC with further information
Supports PAC with further information
Discusses forward PAC programme and esponds
Discusses forward PAC programme and esponds
Committee of Public
Accounts (PAC)
Committee of Public
Accounts (PAC)
Meets about 50 times a year
Meets about 50 times a year
Takes evidence from Accounting OfficersTakes evidence from Accounting Officers
Reports findings to House of Commons and makes
recommendations
Reports findings to House of Commons and makes
recommendations
Sets programme of hearings and studiesSets programme of
hearings and studies
Government
Audited Body
Government
Audited Body
Accounting Officers appears before PACAccounting Officers appears before PAC
Treasury Officer of Accounts is also in
attendance
Treasury Officer of Accounts is also in
attendance
Government responds to all PAC recommendations
in Treasury Minute
Government responds to all PAC recommendations
in Treasury Minute
Government replies to the annual PAC debate
Government replies to the annual PAC debate
Committee of Public Accounts 2010 -2015
• NAO Independent View
• 276 Evidence Sessions
• 1338 Recommendations (88% Accepted)
• 967 Witnessess
• Accounting Officers
• SRO and Private Companies
• Local and International Visits
• Follow the Taxpayers Pound – wherever spent
• Strengthen accountability
• Increased transparency
• Develop skills in government
• Strong centre of government
• Better financial management
• Better services
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The Work of the Committee of
Public Accounts; HC1141; 2015
Consistency
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Effective
Strategic
Centre
CO,HMT
Effective
Strategic
Centre
CO,HMT
Influencing and
Regulating
BIS, DFEFRA, FCO,
DfID
Influencing and
Regulating
BIS, DFEFRA, FCO,
DfID
Mass
Market
Operations
DWP, HMRC
Mass
Market
Operations
DWP, HMRC
Delivery
through
Networks
DfE, MoJ, HO,
DCMS
Delivery
through
Networks
DfE, MoJ, HO,
DCMS
Local
Service
Delivery
DH, DCLG
Local
Service
Delivery
DH, DCLG
Delivering
Major
Programmes
MoD, DfT, DECC
Delivering
Major
Programmes
MoD, DfT, DECC
The NAO Approach to Performance Audit?
• Support to business
during a recession
• Reorganising central
government
• Tackling problem drug
use
• Increasing the
collection of tax
• Early Action
A study of how government programmes, projects and
initiatives are implemented and if they are the optimal use of
resources to achieve the intended outcomes
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STANDARDSSTANDARDS
Quality Assurance
Quality Assurance
Study Selection
Study Selection
Study DesignStudy Design
Well Managed
Well Managed
Robust EvidenceRobust
Evidence
Objective Analysis
Objective Analysis
Client Engaged
Client Engaged
Clear
Reports
Clear
Reports
Measure Impact
Measure Impact
Follow-upFollow-up
Quality
Some Final Observations
• SAIs have a significant contribution to make to supporting government efforts in managing for results
• The use of public money is a key element of any performance management framework
• SAIs are on a journey to enhance the impact of performance audit work
• Building robust approaches to performance audit will serve citizens well
• We can all learn from each other
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Continuing the dialogue……